John Chambers' band of Cisco geniuses have a new start-up aimed at Amazon Web Services

Key Points
  • The four-member "MPLS" team previously delivered new technology to Cisco through three spin-ins, most recently in 2013.
  • Their current start-up, Pensando Systems, sells hardware and software to big cloud providers and other companies.
  • Hewlett Packard Enterprise has invested in Pensando alongside former Cisco CEO John Chambers.
John Chambers, then-CEO of Cisco, at the 2015 CGI Annual Meeting in New York.
Adam Jeffery | CNBC

Sometimes when you work with successful people, you want to stick with them. That's what ex-Cisco CEO John Chambers is doing with Mario Mazzola, Prem Jain, Luca Cafiero and Soni Jiandani.

Together they are known, using the first letters of their first names, as MPLS, which doubles as an acronym for a data center networking capability called multiprotocol label switching. The foursome arrived at Cisco in 1993 through its acquisition of Crescendo Communications, giving Cisco ethernet switching technology, which would eventually become a core part of its business. They went on to build start-ups with investments from Cisco, which then were bought by Cisco outright and brought back to the company in arrangements that came to be known as "spin-ins," most recently with Insieme Networks in 2013.

Chambers stepped aside as Cisco's chief in 2015. After MPLS formed a new start-up called Pensando Systems in 2017, Chambers invested and became its chairman. Now that he no longer controls a major company, Chambers is simply rooting for the team to build a lasting company on their own.

Pensando's hardware and software can help companies run their servers more efficiently. The start-up's chips take on certain computing work that would otherwise be handled by the main chips, freeing them up to do other things.

The emergence of Pensando shows that interesting computing concepts can be popularized by the few large-scale cloud computing companies, which operate vast fleets of computers for other companies to use, not just the companies that sell hardware.

In 2017 Amazon Web Services, the largest cloud provider, announced hardware called Nitro, drawing on work from Annapurna, a semiconductor company Amazon had bought two years earlier. For one thing, Nitro can handle server virtualization, which enables multiple applications to run on a single server.

Pensando aims to provide this versatility to other companies, including rival cloud providers, and the start-up claims its technology delivers five to nine times better performance than Amazon's Nitro. Cloud provider Oracle has signed up as a customer, as have Equinix, Goldman Sachs and NetApp.

In the past, Cisco has managed the duties of taking to market technologies developed by the MPLS group. This time, it's all on them. The MPLS team has never missed, Chambers told reporters over dinner in San Francisco this week. He envisions Pensando becoming profitable and said he would like to see the company to go public.

Hewlett Packard Enterprise, Goldman Sachs and Lightspeed Venture Partners have invested in the San Jose, California-based start-up, which is targeting a post-money valuation of $645 million.

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